Home Interview Discovery to disclose the secrets of buying Scripps

Discovery to disclose the secrets of buying Scripps

0

 

Discovery Communications doesn’t need any introduction. So we won’t tell you the facts about the company which you already know and will try to find out about Discovery’s recent news, future plans and strategies from Andrey Stoychev, VP, Head of Commercial development, Distribution, Sports and Commercial Operations at Discovery  He is running a huge and diverse region from the Czech Republic to Kazakhstan and Israel.  Mr. Stoychev shared with Mediasat how he uses different approaches in every region, maintaining the Discovery’s global strategy.

 

Discovery Communications is completing the acquisition of Scripps Networks Interactive. Is the process finished? What is a goal of buying Scripps? What are the expectations and prospects regarding the deal?

The purpose was to create a bigger brand. Also the content on Scripps is very good, they have a big share of female audience. The channels of the group are unique, some of them, like HGTV, have never been presented in Europe before. With our distribution network across 200 countries we are able to target every audience.

The combined company creates a new global leader in real life entertainment serving passionate enthusiasts with content that inspires, informs and entertains.

Together with Scripps’ leading lifestyle entertainment brands, Discovery is now one of the world’s leading media companies, with a large and diverse IP portfolio that is available in more than 220 countries and territories and 50 languages. We will accelerate innovation so that everyone can enjoy our portfolio of brands across every screen and provide new ways for advertisers and distributors to reach highly targeted audiences at scale. We will stay unique, a real-life content leader differentiated among an increasingly crowded marketplace defined by high-cost scripted programming.

The acquisition is expected to be accretive to Adjusted Earnings per Share and to Free Cash Flow in the first year after close, including significant cost synergies estimated at $350 million. Discovery will be a robust cash flow engine creating optionality to invest in long-term growth opportunities.

A priority focus is bringing Scripps Networks’ powerful content and brands to more people across more screens and services, and in more markets.  We look forward to work together as one team to drive new reach, relevancy and value of the Scripps content and brands around the world.

How will the integration of Scripps into the structure of Discovery Communications impact the staff and portfolio of both companies? Will it bring any changes to thematic channels?

We have taken steps to optimize the geographic footprint, cost basis and core businesses of the new company. In January, we announced a new real estate strategy, which will see the development of a new Global Headquarters in New York in the second half of 2019; the closure and sale of our current global headquarters in Silver Spring, Maryland; and (with the closing of this transaction) the creation of a National Operations Headquarters at Scripps’ current campus in Knoxville, Tennessee.  

Discovery will be able to optimize our combined portfolio to meet the needs of individual markets and drive new value for business partners and most importantly, the passionate fans of our content.  As one example, Food Network presents a fantastic opportunity to launch new channels and digital services with content that is attractive to audiences and advertisers around the world.

Some analysts assure that the united corporation will become an instrument of pressure on Pay-TV operators. Could you give a comment on this?

It is not our aim, it is only to enrich our content (smiling). We have a strong portfolio of pay TV channels across Europe making it a top-ten media company in several key markets and we’d like to keep it that way. We’re not interested in pressuring our partners that bring us profits.


What is the position of Discovery regarding internet broadcasting?  Are you going to continue with Pay TV operators?

The priority of the new, combined company is to take advantage of untapped opportunities that will allow us to expand leading brands globally via pay-TV, FTA & digital.

Discovery includes the #1 fastest-growing sports streaming service in the world (Eurosport Player); the #1 media company on Facebook Watch, and the #1 digital media platform for automotive (MotorTrend on Demand).

Eurosport Player, which now has more than one million subscribers and gained valuable added traction during the 2018 Winter Olympics. Our other DTC products include DPlay and 7TV (JV with Prosieben in Germany). Our content is also available on Amazon’s direct to consumer video platforms in the UK and Germany. We will seek to forge more powerful partnerships with relevant platforms, leveraging the 8,000 hours of content that we own.

We think providing viewers with a choice is the best option here. This works for everyone and we prefer it stay that way in the future.

We will keep you apprised as decisions are made.


Many media giants (Viacom, Viasat etc.) are planning or have already launched video services / OTT platforms to deliver their own content directly to subscribers, bypassing telecom providers. Are you going to follow this trend?

With over 7 billion monthly streams (Group Nine Media), Discovery is evolving to become a leading digital player across short-form video, direct-to-consumer and mobile.

In key markets in Europe, Discovery also operates its own direct to consumer platform DPlay (Italy, Nordics), and 7TV (JV partnership with Prosieben in Germany), while also being present on Amazon UK and Germany.

If to talk about Ukraine, Netflix is not really successful there, because domination of FTA channels, the audience is not used to pay for content. If we look how Netflix has become popular in the USA we see that its price of 7 $ was moderate comparing to prices of cable operators. Meanwhile it is not so successful in European countries, where cable deal is around 10-15$. So I think it should be a hybrid model, depending on the country.

What is your opinion on technologies of additional and virtual reality? Does Discovery Communications see a perspective in them? If yes, then how are you going to use them?

We’re not “going to” – we already do. Viewers can already experience virtual reality content and explore the world directly from their couches via our Discovery VR app. We always do experiments and innovations, we are in forefront of technologies. Also we have joint VR cinemas with Samsung.

What does the user need to use it? Does he need a special box or glasses?

It depends on the app and on the show.
What are Discovery’s plans for 4K and 8K television? There is already a demand for direct Ultra HD broadcasts, in particular sports events. The popular opinion is that technologies are ready but there is a lack of content in 8K.

I think here is the “egg and chicken” case. Discovery tries to do its best. We has become the first channel to broadcast 24/7 in HD. As a matter of fact, Eurosport has launched a 4K Ultra HD TV channel exclusively for Roland Garros a couple days ago. Coverage will be available on multiple platforms across Europe. In addition to the 4K feed, the tournament will be available in HD through the Eurosport 1 and Eurosport 2 channels. Now we’re thinking about adding this feature for other sporting events.


As far as we know, you are a member of the anti-piracy organization TeRaPro, based in Bulgaria. Share, please, your successes and achievements in fighting piracy.

In Bulgaria it is successful as it is a cooperation of content providers and big market players, whom piracy hurts first of all. In order to quantify the potential subscription under reporting and content piracy, EY has created a customized approach and methodology to extract and use the data from the publically available information sources for the purpose of this analysis. We have conducted a detailed analysis of the various available information sources in order to identify any data relevant to our analysis.

This methodology consists of the following phases:

  • Collecting data and database preparation – calculation of the potential number of subscribers of paid television in Bulgaria
  • Quantification of potential misreporting
  • Quantify the monetary value of potential content piracy
  • Variance Analysis and findings

 

  • Current subscribers reported as per 2015 CRC data – 1,784,013
  • Our calculations for potential number of subscribers – 2,398,877
  • Excess number of subscribers not reported (+34%) – 614,864
  • Gross potential impact from under reporting only (BGN) – 76,673,233
  • Gross annual potential impact range (underreporting + piracy BGN) – 64 – 149 million

What is your advice to Ukrainian market? Have you cooperated with anti piracy organizations, “The Clear Sky”, for example, media groups?

In Ukraine , first of all the law needs to be implemented. It will attract foreign partners to Ukraine. Of course, we are open to cooperation with local groups and organizations.

 

In 2017, Discovery Communications generated revenues of almost $ 6.9 billion, a 6% increase over the previous year. What are the main drivers for growth?

First of all, it is improving of our content, we invest there a lot of money, particularly in sport. The contract with Scripps is a part of this strategy for this year. Also Discovery has an unrivaled distribution network for our content around the world, including an average of 10-12 widely distributed pay-TV channels in every market, strong market share with FTA channels in key countries in Europe (Italy, Nordics, UK and Germany), and an expanding portfolio of digital streaming services such as Eurosport Player, Dplay and 7TV in Germany.

 

What is special about the EMEA region, which you are running?

It is a very big region with different markets which are on different stages. There is Germany with its FTA, markets with Pay cable TV, markets with high broadcasting penetration… We have different approaches to all of them.


What is Discovery’s content and marketing strategy for your EMEA portfolio this year?

In line with Discovery’s global strategy to deliver more premium content to more fans than ever before, the focus in our EMEA markets is to continue to build our key franchises and bolster our strong global brands. With a closer alignment to the US, our upcoming programming slates will continue to elevate our portfolio and bring our viewers and super-fans around the globe more of the shows and genres they love, from must-watch factual documentaries to scripted content that entertains, enlightens and inspires.  Also, following our recent acquisition of Scripps Networks Interactive, we now have the opportunity to strengthen our portfolio in EMEA with some of Scripps’ loved programming and brands such as Food Network, HGTV, Travel Channel – much of which will never have been seen before in EMEA. Ultimately, our goal remains to super-serve our communities of fans across Europe, Middle East and Africa, with our quality, premium and purposeful content offering.

 

What were best performing shows last year? (global/international / EMEA overview)

Across our different markets, regions have varying and individual tastes, however there were a couple of standout shows that performed outstandingly well in more than one market.

  • Series 8 of “Gold Rush” ranked in the top 4 programs for 2017 in 9 out of 13 EMEA regions it was broadcast in
  • Wheeler Dealers series 13 ranked in the top 5 in 4 out of 5 EMEA markets.
  • In Poland, Scrappers series 5 made history, achieving the #1 and #2 highest rated transmissions ever on Discovery Poland.
  • In South Africa, the “90 Days to Wed” franchise has been a huge driver for ratings this year, accounting for 11 of the Top 20 most watched episodes of the year so far on the channel, including Before The 90 Days becoming the most watched show this April, delivering an average audience of 170,000 viewers.
  • “Diana: Tragedy or Treason” was the most watched program of 2017 on TLC both in South Africa and the UK.
  • Proving that ID is the channel with the stickiest content, the ID original show “Dead Silent” set a channel record for TLC Germany in October, with 270,000 people tuning in to one episode alone, making it the best single airing ever on the channel.  
  • “Married With Secrets” accounted for 4 of the most watched episodes of 2018 so far on the channel, peaking in February where it delivered an average audience of 107,000 viewers.


What are your plans in Ukraine? Can Ukrainians expect launching any local versions in Ukrainian?

We’ve already launched Ukrainian version of our official website and the content of our Facebook page is in Ukrainian too. The situation with broadcasting is more difficult: full adaptation will lead to a significant increase in package prices.

 

After the crisis of 2014 in Ukraine providers have complained on high prices for foreign channels, in particular Discovery, negotiated to reduce the price and some of them had to stop broadcasting Discovery. Could you give a comment on this? Do you have the same price policy in all the countries?

The situation in Ukraine in 2014 was complicated, though a lot has changed since then. The market along with its demands and possibilities have changed too. I believe, the crisis peak is over by now. We try to keep the prices affordable for viewers in every country Discovery Channel is broadcasted in, we are flexible and ready to cooperate with our partners.

Do they prefer different content?

Of course, there are some local preferences, but our researches show that people all over the world are very similar and have the same problems, top-5 shows are more or less the same. We don’t produce shows localy but when we order a production we keep in mind that we have an audience worldwide and the show supposed to be international, not only being actual in one particular country. Here is one of the answers why we bought Scripps, we are trying to serve every audience, to satisfy the basic curiosity of everybody.
What are the main problems of pay-TV market in the regions you are supervising?

Service providers depend on strategic and technological decisions taken by device manufacturers and software providers. This leaves them vulnerable to changes in browser platforms used on PCs and to the Android and iOS operating systems of mobile devices. Multiscreen TV applications that worked previously may suddenly stop streaming content which can lead to dissatisfaction with the operator, damage to its brand and loss of revenue. Service providers also need to ensure that content security standards are not compromised by choosing a vertical, per-device, per-platform and per-browser vendor approach, and that content licensing complexities are not increased by having to deal with multiple DRM vendors. Pay-TV service providers should keep in mind that giant corporations like Apple, Google, and Microsoft that define their proprietary technologies, are also their competitors in delivering OTT TV. Dependency on the strategies of these companies increases business risk levels for service providers.

The solving of the problems depends mostly on the specific market. In Ukraine it depends a lot on that how the Pay TV market will develop, on encryption of satellite channels, etc. The satellite encryption in Ukraine will be a positive change for us a pay TV player. Ukraine has a big territory with a big population, it has a potential for a bunch of technologies. You need to start step-by-step, first it goes encryption and fighting piracy to develop all the potential. It is difficult to compare Ukraine to any other market, it is very special, but need to mention that the situation here a bit resembles the situation in Greece few years ago – strong FTA, etc. Now Greece has 25 % of Pay TV penetration. FTA can’t cover everything, if there is interesting and exclusive content people will pay for it.

Have you noticed any new TV content trends in the market place, and how has this informed your strategy?

The communication industry has made advances in the last years, witnessing rapid adoption of the latest generation of connected devices and increasing investments in faster networks. At the same time, digital has transformed the consumer experience, bringing new expectations and different rules of engagement. Cable operators in Europe have led the change by shaping and meeting consumer needs with their high-speed communications services. Not to mention the streaming revolution that is not a big news but continues to shape the market and influence the content strategies. People prefer to watch programs from everywhere. VOD is very powerful trend for the following years. Meanwhile, many viewers staying conservative and prefer regular linear TV broadcasting. TV is not dying, as I have heard on conferences for many years (laughing). So the strategy is to be hybrid to cover all of them.

Therefore, we always seek to forge more powerful partnerships with relevant platforms, leveraging the 8,000 hours of content that we own, offer new services, updating and expanding our portfolio.

Discovery Channel is your flagship channel brand globally. What can viewers look forward for across the year?

Discovery Channel is the #1 factual channel in key markets across EMEA, including UK, Italy, Poland, Netherlands, and South Africa. Dedicated to creating the highest quality non-fiction content, in 2018, Discovery Channel will see several returning popular franchises, as well as a host of global specials that will engage our passionate audiences like never before. Fuelling the demand for the motor trend, audiences can expect more Turbo genre content, featuring brand new titles such as Twin Turbos and exciting spinoff of Fast N’ Loud, Shifting Gears, which sees Aaron Kaufman return to screens with an all-new garage team. Other programming highlights include documentary special Virus: Invisible Killers which explores the impact of some of the world’s deadliest diseases, Influenza, Ebola and Smallpox. We will also be welcoming talent Tim Kennedy as one of our brand new Discovery faces. The Green Beret and ex UFC fighter attempts the most hazardous jobs in the world in his show, Hard to Kill. On top of this, there will be more episodes of Gold Rush, Alaskan Bush People and Fast ‘N Loud, ensuring Discovery Channel remains the only destination for the best in non-fiction factual entertainment programming.

What are the upcoming programming highlights on your global female brand, TLC?

Offering remarkable real-life stories without judgment, TLC is the most widely distributed female lifestyle channel across the world and a leader in the lifestyle category in markets such as South Africa. This year, TLC promises its superfans even more of the content they love –  from heart-warming transformations to life’s milestone moments. Building on TLC’s love and relationships genre, the wildly popular 90 Days to Wed franchise will return with more spinoff series, following the hugely successful launch of

  • 90 Days to Wed: Happily Ever After
  • 90 Days to Wed: Before The 90 Days.

Hit series My 600lb Life is back with a brand-new spinoff show: My 600lb Life: One Ton Family, following the journey of the three Perrio siblings, who after a lifelong struggle with obesity travel to Houston to meet Dr Now in a last-chance journey to lose weight.

Audiences can also look forward to all-new content, including: Dr Pimple Popper which follows YouTube celebrity and dermatologist Sandra Lee remove life-altering growths from patients’ skin so they can reclaim their lives and The Transition, which takes an emotional look at couples where one of the partners has come out as transgender, documenting their journeys as they come to terms with their new existence.

Will audiences see a similar slate of original programming on your other channels, Animal Planet, Investigation Discovery and Discovery Science?

Thanks to recent new appointments made to our global leadership team in the US, which includes new heads for our Lifestyle and Male Factual brands, as well as for ID and Animal Planet, we now have an exciting pipeline of content set to come through to our channels here in EMEA.

  • In 2018, Animal Planet will continue to immerse viewers into the full range of life in the animal kingdom with series including Dodo Heroes, an exciting new partnership between Animal Planet and The Dodo (part of Group Nine Media and a leading animal brand on digital) the series tells stories of six incredible groups of people who have given their lives to improving the future of animals.  
  • The The Irwin family – Terri, Bindi and Robert – are returning to Animal Planet with brand new show The Irwins, which will see the trio continue Steve’s legacy as they bring the wildest animals and the most phenomenal wildlife stories from around the globe into the homes and hearts of viewers, no matter where they live.  

On Investigation Discovery, our leading destination for true-crime programming, viewers can expect an in-depth insight into some of the biggest criminal cases to hit the headlines.

The American Murder Mystery franchise will deliver in-depth documentary specials including:

  • Jodi Arias: American Murder Mystery,
  • Natalie Wood: An American Murder Mystery
  • The Staircase Killer.

People Magazine Investigates will launch two spinoff shows:  

  • People Magazine Investigates: Crimes of Fashion
  • People Magazine Investigates: Cults.

Meanwhile, Gypsy’s Revenge spotlights a dark case of abuse and retribution, following the story of mother and caregiver Dee Dee Blanchard and her supposedly terminally-ill daughter Gypsy.  

Are there any other highlights your audiences can look forward to across the year?

As part of our wider content strategy, we will also be focusing on some noisy global events that will engage our audiences across the world and encourage them to take action – whether that be sharing reactions on social media or delving deeper into a specific subject matter.  

  • Leading the way, is Shark Week, Discovery’s longest running programming event which returns in July, celebrating its 30th Anniversary. This year the stunt will feature some of Discovery’s most famous faces, as we once again look to educate and entertain our audiences with more Shark action.
  • Also, as part of celebrations to commemorate the 60th Anniversary of NASA and the moon landing, Discovery Channel will take an awe-inspiring look at Space exploration in the one-off special Nasa: Above and Beyond. With wide-ranging access to NASA leaders and scientists, the film will chronicle the scope of NASA’s work around the globe, to the farthest reaches of our solar system and galaxies.  

        While on Animal Planet, our new global series Dodo Heroes will appeal to those who have a passion for animals and encourage viewers to do their part in protecting the wildlife around them.